Southland News

Preparing yourself for times of financial uncertainty

Financial resilience is defined as the ability to endure and withstand life events that impact income or assets. Preparing for the unknown or unexpected, such as a job loss or economic downturn, is imperative in establishing and maintaining financial resilience.

Given the current fluctuating financial climate, it is now increasingly important to practice smart money habits. While that may sound daunting or unattainable, the truth is, being financially resilient doesn’t mean having a lot of money. It means being proactive and savvy with the money you have today, so you can feel confident that your finances are ready to face whatever happens tomorrow! Here are three ways to improve your financial resilience.

Assess your budget

Creating or assessing your budget doesn’t have to be complicated, but you can’t begin unless you know where your money is going. Start by tracking your money in vs. money out for 30 days. Then, comb through your findings and determine if your spending habits align with your priorities and goals. Goal setting allows you to set tangible, realistic benchmarks for your finances and measure your progress along the way. For example, where do you see yourself in one year? How about ten years? Is retirement something you’ve taken into consideration? How much debt do you have? Setting up a budget and regularly revisiting it gives you control over your money and allows you to be more intentional with your spending. Start with a spreadsheet, or use an app to set up and monitor your budget so you can easily keep tabs on your progress. Southland’s budgeting personality quiz is a great place to start figuring out what type of budget you should have.

Start an emergency fund now

If you haven’t already, consider starting an emergency fund today. Try depositing a portion of your paycheck into an emergency savings account every pay period—it’s a great way to accumulate savings consistently. Even better, have your checking account automatically take a portion out with every direct deposit. This way, you won’t ever have to remember to transfer money to your savings.

Regardless of the financial climate, coming up with a savings plan is a great way to ensure you’re financially prepared for the unexpected. Generally speaking, it is wise to have three to six months’ worth of expenses set aside in case of unemployment, recession, injury, etc.

Cut unnecessary costs

Another great way to prepare for an unanticipated financial hit is to cut your costs where you can. Go through your last few months of expenses and identify charges you can reasonably reduce or eliminate. For instance, one of the best ways to tackle excess spending is to cook at home. Remember, some cups of coffee that are purchased at coffee shops cost the same amount as a whole tin of coffee at the market! Eating and drinking out can add up very quickly. Another huge cost we often face, sometimes even unknowingly, is recurring subscriptions. Double-check your monthly statements to make sure you aren’t paying for a subscription to something you no longer use.

Remember, it is never too early to start preparing yourself to be more financially resilient. If you start today, you will thank yourself later!